Pearl increases Resolution holding

by Gill Montia

Story link: Pearl increases Resolution holding

Following Standard Life’s £4.9 billion bid for Resolution at the end of last week, Pearl, Resolutions largest shareholder, increased its stake in the company from 16.5% to 24.18%.

Last Friday, Resolution announced that it had agreed to Standard Life’s cash and shares bid, but within the hour Pearl returned with a revised bid and at the same time increased its stake in Resolution.

The unexpected move will allow Pearl to block a competitive bid by Standard Life, which would need the support of 75% of Resolution shareholders to be successful.

Pearl’s increased holding is such that even if Standard Life changes its terms to an offer, which would require only 50% support from Resolution shareholders, it can still block a takeover.

In any event, for Standard Life, making an offer could raise capital gains tax difficulties and also create problems in selling on Resolution’s closed-fund assets to Swiss Re.

The £2.3 billion sale of these assets forms a key part of Standard Life’s strategy.

Standard Life’s advisers remain confident that the insurer will be successful, stating that it “still had plenty of options”.

Until Thursday of last week, Resolution was moving ahead with plans for an £8.6 billion merger with Friends Provident.

However, after considering Standard Life’s bid during Thursday evening, Resolutions board agreed to abandon the merger, a decisions that cost the company a £49 million break fee.